Former business secretary Vince Cable blasts progress of government "matchmaking" scheme to help small businesses access alternative finance

I am City A.M.'s chief City reporter, mainly covering banks, Brexit, M&A and deals. I also cover media stories and enjoy interviewing big figures from the business world. I previously worked for Press Gazette and Mail Online.

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Vince Cable was business secretary in the Tory-Lib Dem coalition government (Source: Getty)

William Turvill

Former business secretary and Lib Dem Vince Cable has slammed the progress of a government scheme designed to help small businesses access finance from alternative lenders.

Under the set-up, nine of the UK’s largest banks pass the details of small businesses on to three designated alternative finance platforms – Funding Xchange, Business Finance Compared and Funding Options – when they have turned them down for loans. The platforms then share the details with alternative finance providers and go on to facilitate contact between them and the businesses.

Cable blasted the slow progress of the scheme as well as the big banks, who he said are continuing to shut out challengers.

“This is disappointing in scale and speed,” he told City A.M. “The referral scheme was agreed when I was secretary of state and is only now happening and on a minute scale.

“The original idea was to open up the offer to all challenger banks but the established big players seem to have succeeded in restricting competition to niche credit providers.”

City minister Stephen Barclay was somewhat more upbeat. Announcing the figures, he said:

A refusal from a big bank should not be the end of the line for a small business and, thanks to our match-making scheme, they have another avenue to try for funding.

Over 200 businesses from beauticians to forklift truck training firms have received the money that they need to grow and we expect this number to increase as the scheme matures.

The government has also now announced a fourth platform, Alternative Business Funding, will join the scheme from November this year.

Mike Cherry, national chairman of the Federation of Small Businesses, said: “FSB championed the proposals for a mandatory bank referral scheme, to diversify the lending market and boost the provision of alternative finance to those turned down by the main traditional banks.

“We welcome that government has delivered the three platforms and congratulate the scores of firms that have benefited in the scheme’s early stages.

“To provide further economic benefit across the UK the scheme must now scale-up, with more referrals and more businesses successfully securing finance as a result.”